is it a good investment to buy a house on leased land? also can the owner of the land raise rent anytime and $

I would also like to know if it is harder to sell a home on leased land? I've seen a few houses in Newport Beach Ca. on the penninsula, and they are all on a land lease. Ive heard its not a good investment as the owner of the land can raise the rent anytime and as high as he or she wants.
In Buying Property - Asked by april w. - Jan 22, 2012
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Mark U.
Developer
Rochester, NY
Premium Subscriber

short answer, it depends.
Yes, it is harder to sell something on leased land. Some buyers don't even consider it, so your buyer pool is smaller. Land leases can be long enough that it is OK to purchase on a land lease (99 years for example). From an investors standpoint, it will depend on the situation, and if the only option has a land lease, then you take the land lease. It could also reduce the amount of investment for a developer, so that could be looked at as an incentive when there is a limited amount of capital available for a particular project. Eliminating the purchasing cost of the land leaves that much more capital for hard / soft costs upfront. If you're worried about it, you can negotiate a "Right of first Refusal" into the deal. That way, if the property is EVER sold (runs with the property) you (or whomever has inherited your right) get the FIRST OPTION to purchase the property at the same exact terms as were accepted by the owner. You don't have to exercise your option either. So, again. I guess it all depends :D
Cheers,
Mark

Feb 1, 2012
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Jay Z.
Broker/Agent
Phoenix, AZ

It is not inherently "good" or "bad". Owners of houses in Hawaii have dealt with leased-land for years. Often the leased land is located in desirable locations. That is good. The time frames are often 99 years. Someone buying the house in Year One is not too worried. Someone buying in Year 60 is paying more attention. The leases often have a provision allowing the lease-price to be adjusted every 10 years (it seldom adjusts any direction but up). You can make a good business decision if you read and understand every word in the land lease.

Feb 1, 2012
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pamela h.
Tenant
Miami, FL

Buying home on leased land is a form of home buying where you only become the owner of house, but not become the owner of land. Its significant advantage is that the home purchase price becomes less as compared to the traditional way of purchasing home. This gives you an opportunity to purchase a higher quality home in prime residential areas. However, there are certain disadvantages that at the time of selling home, it becomes quite daunting to find prospective buyers. But, if you are having trouble to decide whether to buy such property or not, then you can take help of experts like Albanese builders who could guide you in the right direction.

Dec 18, 2013
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